G.R. No. 263887, August 19, 2024
Philippine Primark Properties, Inc., Petitioner, vs. China Banking Corporation Trust and Assets Management Group, Respondent.

FACTS

Petitioner Philippine Primark Properties, Inc. (Primark) entered into an Omnibus Notes Facility and Security Agreement (ONFSA) with China Banking Corporation (CBC) and China Bank Savings, Inc., wherein the banks granted Primark a loan facility. To secure its obligations, Primark assigned its present and future lease receivables, including those from BDO Unibank, Inc. (BDO), to respondent China Banking Corporation Trust and Assets Management Group (CBC-TAMG) as assignee/security trustee. Primark later defaulted on its loan and was declared in default. CBC-TAMG then notified BDO, pursuant to the assignment, to pay the lease rentals directly to it. Primark, however, contested this, claiming the ONFSA and the assignment were void ab initio for allegedly violating banking laws on DOSRI loans and instructed BDO to ignore CBC-TAMG’s notice. Faced with these conflicting claims, BDO filed a Complaint for Interpleader before the Regional Trial Court (RTC) against Primark and CBC-TAMG to determine the rightful recipient of the rental payments. The RTC dismissed the complaint, ruling that CBC-TAMG lacked legal capacity to be sued as it was merely a department/unit of CBC and not a separate juridical entity. The Court of Appeals reversed the RTC, prompting Primark to elevate the case to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in reversing the RTC’s dismissal of the interpleader complaint, specifically on the ground that respondent CBC-TAMG lacks legal capacity to sue or be sued.

RULING

No, the Court of Appeals did not err. The Supreme Court affirmed the decision of the Court of Appeals. It held that CBC-TAMG, as the designated Security Trustee under the ONFSA, has the legal capacity to sue and be sued in relation to the enforcement of the security interest over the assigned receivables. The Court ruled that a trust department of a bank, when acting as a trustee, possesses a separate juridical personality from the bank itself in its commercial capacity. As a trustee, CBC-TAMG holds title to the trust property (the assigned receivables) for the benefit of the secured parties (the banks). Consequently, it is the real party-in-interest authorized by the Rules of Court to prosecute or defend actions concerning the trust property. The RTC’s dismissal of the interpleader suit on the ground of CBC-TAMG’s lack of capacity was therefore erroneous. The case was remanded to the RTC for further proceedings.